SOCIOLOGY CHAPTER 14 Capitalism and Economy

The CREATIVE CLASS is a category of workers in multiple occupations and industries united by the fact that creativity is central to their productive work. It is in high demand by companies and, as an extension, by cities and towns, which go to great efforts to attract them.

Define the CREATIVE CLASS and describe its impact on the job market and on cities and towns that want to attract members of this new class.

American workers are more productive than ever, yet job insecurity is high. As a result, many people are working longer hours, especially people at higher income levels, in order to prove loyalty or achieve marginal benefits.

Explain the relationship between job insecurity and hours worked as it plays out in the American workforce.

THE FEUDAL SYSTEM, which preceded capitalism in Europe, began to change as early as the fifteenth century with the ENCLOSURE MOVEMENT, which forced people off what had been public land and sent them looking for work in cities.

Describe the various factors that contributed to the demise of FEUDALISM and laid the foundation for industrial capitalism.

Beginning in the eighteenth century, NEW FARMING TECHNOLOGIES led to an agricultural revolution that helped increase the population and the value of land, and
INNOVATIONS IN MANUFACTURING AND TRANSPORTATION TECHNOLOGY CREATED a demand for this larger labor pool to fill new jobs.
Also connected to industrialization was the transition from barter to the use of a legal currency to buy and sell goods and from agreements between individuals to contracts between corporations.
***New farming technologies during the agricultural revolution lowered the amount of labor needed per acre, which resulted in a surplus of peasant labor. This was one of several factors that led to the development of capitalism (p. 540).

Explain the importance of monetization, the corporation, and limited liability to the ***DEVELOPMENT OF CAPITALISM.

ADAM SMITH argued that:
-Competition, helps maintain a cohesive society.
***The idea that competition, not conflict, helps maintain social cohesion was put forward by Adam Smith.
-Specialization increases productivity and innovation.
_ The use of money, as opposed to barter, makes trading more efficient.
***Adam Smith proposed that specialization, as well as the use of money instead of barter, led to greater efficiency, which produces greater wealth. In this case, you should strive for more efficient exchanges (p. 542).***The idea that competition, not conflict, helps maintain social cohesion was put forward by Adam Smith.

Summarize ADAM SMITH’S ARGUMENTS about the role of self-interest, competition, specialization, trade, and monetization in maintaining a cohesive society.

GEORG SIMMEL
-Saw the evolution of monetary payment systems—from piecework payment to wage labor to salaried work—as a force to depersonalize exchange.
-Moreover, he felt this was a positive change that helped create separate public and private spheres and gave workers more freedom to enjoy the private, or leisure, sphere.
**Under a salary system, workers are paid for the sum total of their services rather than for direct service. As Georg Simmel noted, it differs from a civil service salary, in which payment is not tied to the productive value of the worker but rather to the appropriate standard of living based on experience and credentials
(p. 544).

Summarize GEORG SIMMEL’S view that the evolution of monetary payment systems from piecework payment to a yearly salary has ultimately given workers more freedom.

KARL MARX argued that capitalism created alienation in workers—
-Alienation from the products they produced.
-Alienation from the production process.
-Alienation from one another.
-Alienation from themselves and their creative tendencies.
***Marx predicted both that capitalism would ultimately destroy itself and that the working class would rise against the capitalist class, leading to a period first of socialism and then communism.
***As you will learn, alienation is a condition in which people are dominated by forces of their own creation that then confront them as alien powers. Karl Marx argued that workers in a capitalist economy are alienated from the product they produce because the production process is apportioned among several people.

Describe the four forms of alienation that exist in the capitalist system, according to KARL MARX, and how Marx predicted that capitalism would ultimately be transformed.

MAX WEBER
-linked the rise of capitalism to technology and ideas, specifically ideas and beliefs connected to the Protestant Reformation.
-Weber ultimately saw capitalism in a negative light, not because he thought it caused alienation as Marx did, but because he thought people became obsessed with working and making money that they could never enjoy.
***Max Weber believed that IDEAS generate social change. For example, he theorized that the Protestant Reformation created the necessary social conditions for capitalism by instilling a doctrine of predestination (p. 548).

The FORD MOTOR COMPANY’S idea of the family wage was based on a very limited definition of family.
***It favored married men with children over single men or married men without children, and it reinforced the notion that women should not work.
***The family wage impelled women to stay married, even if their marriages were unhappy or oppressive. Today, the gender bias built into the family wage persists (p. 551).

Explain the significance of HENRY FORD’S FAMILY WAGE and how it is connected to gender inequality.

-The fact that women have often been paid less than men has served to deter them from seeing work as a lifelong choice.
-The wage structure was one factor that made women see marriage as the only way to have -financial security
-Studies show that working mothers are less depressed and have higher self-esteem than mothers who do not work, yet they are also more likely to feel tired and anxious and to have higher divorce rates.

Explain how UNEQUAL PAY has adversely AFFECTED WOMEN’S LIFE CHOICES.

Compared to people in many other industrialized countries and some developing countries, Americans work longer hours and have fewer vacation benefits and less generous family-leave policies. Which suggests that work is central in the lives of Americans.

Compare work hours, vacation benefits, and FAMILY LEAVE POLICIES in the United States with other industrialized countries.

While more American companies are offering family-friendly policies such as flextime and “flexspace,” employees are not necessarily taking advantage of them in great numbers.

While GLOBALIZATION is not a new phenomenon, the current period of globalization has a number of new elements, and it has clearly demarcated the division between the world’s rich and poor. The question is whether globalization can truly be a force to close that gap or if it serves only to widen it.
*** In this era of globalization, trade agreements are multilateral.
This means that they are the result of negotiations among multiple players and that they enforce rights, impose sanctions, or encourage business at a regional or worldwide level. You will learn more about globalization in the chapter.

Define GLOBALIZATION and understand how the current period of globalization differs from previous ones.

A CORPORATION is a juristic person—an entity that has all the legal rights, duties, and responsibilities of a person—although their primary goal is the pursuit of profit.

Describe THE ROLE OF CORPORATIONS in the world economy and the legal connection between the corporation and the idea of an individual.

The overriding objective of corporations is to make profits for their shareholders, and in order to do this they must find ways to beat the competition. Sometimes these efforts lead corporations to cross the line of legality or at least to come close to crossing it.

Explain the different ways that CORPORATIONS TRY TO BEAT THEIR COMPETITION.

There is constant tension for corporations in terms of pressures to be profitable and pressures to be environmentally responsible, which can add to overall costs..

Describe the tension that exists between environmental policies and corporate goals for profitability.

Employees also exert pressure on corporations, in the form of asking for better wages, benefits, and working conditions, all of which add to a corporation’s costs and make it less profitable. But not providing these things may also have a negative cost in terms of loss of workers, strikes, or lower productivity.

Explain how consumers can influence a company’s labor policies.

***Unionization rates have declined in the United States since the 1950s. But, according to several studies, workers today want to be part of a union more than ever (p. 565).
***One key concern about unionization is MANAGEMENT HOSTILITY TOWARD COLLECTIVE ACTION, which could result in tense working conditions. Another concern involves job loss, especially with the increasing ability for companies to move over seas (p. 567).

Describe possible explanations for declining UNION MEMBERSHIP IN THE UNITED STATES.

There has been a lot of concern in the United States about job loss due to offshoring (when a company moves operations overseas to cut costs) and due to the presence of illegal immigrants, who are often paid less than a U.S. citizen would be. Some people argue that illegal immigrants have an important role in the economy, not taking jobs from Americans but rather doing jobs that Americans won’t do. Others argue that illegal immigrants are ultimately a drain on social services and should be deported with no option for getting legal working papers or citizenship.

Describe some of the tensions and paradoxes that exist in debates over immigration policy in the United States.

***CAPITALISM

***Economic system in which:
– property and goods are primarily owned privately;
– investments are determined by private decisions;
– and prices, production, and the distribution of goods are determined primarily by competition in an unfettered marketplace.

***FEUDALISM

Precapitalist economic system characterized by the presence of lords, vassals, serfs, and fiefs.
***Before capitalism in Europe, the dominant economic system was feudalism. Feudalism was characterized by lords who owned the land, vassals who managed the land and offered military protection, and serfs who worked the land (p. 539).

AGRICULTURAL REVOLUTION

The period around 1700 marked by the introduction of new farming technologies that increased food output in farm production.

CORPORATION

A legal entity unto itself that has a legal personhood distinct from that of its members, namely, its owners and shareholders.

ALIENATION

A condition in which people are dominated by forces of their own creation that then confront them as alien powers; according to Marx, the basic state of being in a capitalist society.

***SOCIALISM

An economic system in which most or all the needs of the population are met through nonmarket methods of distribution.

COMMUNISM

A political ideology of a classless society in which the means of production are shared through state ownership and in which rewards are tied not to productivity but to need.

FAMILY WAGE

A wage paid to male workers sufficient to support a dependent wife and children.

SERVICE SECTOR

*** is a section of the economy that involves providing intangible services (p. 557). EXAMPLE: CLEANING SOMEONES HOME

***CHAMPAGNE- GLASS DISTRIBUTION

***The unequal, global distribution of income, so named for its shape.

MONOPOLY

The form of business that occurs when one seller of a good or service dominates the market to the exclusion of others, potentially leading to zero competition.

OLIGOPOLY

The condition when a handful of firms effectively control a particular market.

OFFSHORING

A business decision to move all or part of a company’s operations abroad to minimize costs.

UNION

An organization of workers designed to facilitate collective bargaining with employers.

UNION BUSTING

a company’s assault on its workers’ union with the hope of dissolving it.

***LIMITED LIABILITY

is a form of ownership that creates a division between the individual shareholder or executive and the business entity. It is a legal way to protect investors (p. 541).

***NITSAN CHOREV

*** According to _______ _________, cheap labor often gives developing countries an advantage. Thus, these countries tend to resist trade negotiations that include agreements that protect labor (p. 560).

***POLITICAL ARBITRAGE

***Is the use of insider political knowledge to earn profits (p. 563).

MILTON FRIEDMAN

***________ ________ said, “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman, 1970) (p. 562).

DECLINED, MORE

Unionization rates in the United States have ________ over the past 60 years, and recent studies show that ________ workers are interested in being part of a collective bargaining agreement.

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